The latest Banque de France forecasts signaled a 6% collapse in production in the first three months of the year – which would set it in motion for an even worse quarter than the 5.3% slide recorded in 1968, when the country was struck by strikes, student demonstrations and civilians. troubles.
French President Emmanuel Macron imposed a severe lockdown on March 17 after frustration that many refused to follow directives on social distancing. These are currently in place until April 15, but could be extended by officials.
The Banque de France estimates that every fortnight that the country goes into lockout will reduce annual growth by 1.5 percentage points, with each week of containment reducing typical activity by about a third.
The foreclosure will put additional pressure on the country’s fiscal position, which has already been weakened by demonstrations of “yellow vests” and the President’s tax gifts. The government launched a € 45 billion (£ 41 billion) bailout and guaranteed up to € 300 billion in loans in March, adding to the pressure.
The news was hardly better for the largest economy in the euro area. The latest forecasts compiled for the German Ministry of Economic Affairs revealed a fall of 1.9 pc in the first quarter alone.
The worst will however follow in the second quarter, as the closure will reach growth of 9.8%, warned a series of economic institutes, including Ifo.
The likely decline would mark the largest decline ever recorded in Germany since the quarterly accounts began in 1970, and would be more than twice as sharp as the slump observed during the global financial crisis in early 2009.
Timo Wollmershäuser, chief forecast officer at IFO, added that almost 250,000 Germans could be laid off. “The recession leaves very clear traces on the job market and the government budget,” he said.
The latest snapshot from the Office of Economic Cooperation and Development think tank also showed the worst month on record for any major world economy last month.